Assignment 4 Cb

8/15/2019 Assignment 4 Cb

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Introduction

In order to survive and attain growth organizations need to make different investments which

require that different decisions are being made. It is a process, by which a person, group or an

organization identifies a choice or judgment to be made, gathers and evaluates information about

alternatives and selects from among the alternatives. Thus, a decision is of great importance for

an organization for which it is interesting for us to see how they make their decisions regarding a

purchase and foremost how the actual decision-making process is constituted regarding a

purchase of a new product in paper and packaging industry.

The aim with this project is to investigate the industrial buying behavior in man !aper and

!ackaging industries. The focus in this industry, as well as in other asset-intensive industries, has

shifted from buying and selling large machine installations to a more service-oriented

perspective.

The purpose of this project is to investigate the industrial buyer behavior of firms within !aper

and !ackaging industry in man when faced with a new product development. "e aim to study

the process and identify possible differences from buying a new product. "e believe that this

study will provide valuable information to marketers and increase their knowledge about the

industrial buyer behavior.

Industrial buyer behavior theory

It is considered as highly important to be aware of why a customer or buyer makes a purchase.

"ithout such an understanding, businesses find it hard to respond to the customer#s needs and

wants $!arkinsson % &aker, '()*+. It is important to be aware of the differences between

consumer buying and industrial buying because the industrial buyer behavior differs from

consumer buying in many aspects such as using more variables and greater difficulty to identify

process participants $oriarty, '()+. The industrial buying is described by !arkinsson % &aker

$'()*+ as the buy of a product which is made to please the entire organization instead of

satisfying just one individual. Industrial buying behavior is considered as being a elementary

concept when it comes to investigating buyer behavior in all types of organizations $ibid+. /lso,

in industrial buying situations there is a perception of greater use of marketing information,


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greater e0ploratory objective in information collection and greater formalization. $1eshpande %

2altman, '()3+

Buyer decision process

/fter defining the different circumstances influencing the buyer behavior we argue that it is

important to define the actual buying decision process. In order for a marketer to be successful

4s5he needs to e0amine the comple0 subject of buyer decision processes $6otler et al, 7883+. The

buying process involves different stages that organizations phase during and after a purchase.

9et, this buying process may differ a lot depending on what type of product that will be bought

$ibid+. The authors :obinsson et al $'(*3+ illustrate this process by developing a model which

lays down how the process of deciding to buy a product looks like for industrial organizations.

This model is separated into eight different buy-phases. These phases will be described in more

detail below

&uying decisions characterize a comple0 set of actions that connect many members within the

buying organization. The result is a commitment to a purchase of a product. $"ebster '(('+

:obinson et al $'(*3;'


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might have to work with others, such as engineers in order to define the item. =ere an

opportunity e0ists for the selling organization by helping define a need and give

information about its value in the product selection. $6otler et al 788>+

3. Product specification. /ccording to 6otler et al $788>+ in this phase of the process the

buying organization develops a technical product specification for the needed item. /s

this specification will serve as the base for people both inside and outside of the buying

organization :obinson et al $'(*3+ mentions the importance that it must be very precise

and detailed in order to facilitate for later stages in the process. The buyer then estimates

the value and the cost reduction, which the new product would imply $6otler et al 788>+.

!hase three is of importance according to :obinson et al $'(*3+ for the seller as it is the

stage in which specified influences enters the buying process. Therefore the seller needs

to know who is preparing and selecting the specification, what specific information

sources that the buying influences are drawn upon, and the roles of the various

individuals and their participation in the decision-making process.

4. Supplier search: /t this stage of the process the buyer performs a supplier search in order

to find the best vendors, and later on contact a number of them. /s the buying task is

newer, more costly and more comple0 the buying organization will consequently spend a

greater amount of time to search for suppliers. $6otler et al 788>+ In the end of this stage

the buying organization will have determined which suppliers that will be considered as

potential sellers $:obinson et al '(*3+.. Proposal solicitation: The buying organization invites the selected suppliers to present

their proposals. It is of importance that the proposals, written documents and

presentations, should inspire confidence and make the supplier stand out from its

competitors. :egarding comple0 products the buyer will most likely require a detailed

written proposal or a formal presentation. $6otler 788>+ /ccording to :obinson et al

$'(*3+ a comple0 product also implies a series of counter-proposals and new offers,

which can result in a time consuming process taking many months.

!. Supplier selection: 1uring this phase the members of the buying centre evaluate and

analyze the suppliers and their proposals. 1ifferent factors are conclusive depending on

the type of product and the buying situation. $6otler et al 788>+ /s the buying

organization approves one or more suppliers# offers and rejects the others, the supplier is


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selected. ?urther negotiations might however occur even though a supplier is selected

regarding prices, deliveries etc. $:obinson et al '(*3+". #rder-routine specification: In this phase of the buying process the buyer prepares an

order-routine specification which includes a final order to the chosen supplier. =ere items

are listed such as technical specifications, e0pected time of delivery, quantity needed of

the item and warranties. $6otler et al 788>+ @ven though one might think that the

purchase is finalized in this phase, it is not. ?rom the viewpoint of the buying

organization the purchase has not been completed and the problem not yet been solved

until the actual product is delivered. Therefore it should be of importance to the seller,

and he should be aware that the purchase is not yet finalized until the product is

delivered. $:obinson et al '(*3+

$. Performance revie%: The last stage of the process involves reviews of the supplier

performance by the buyer $6otler et al 788>+. This review includes questions as to how

well the product bought has solved the problem and how well the supplier performed

prior, during and after the purchase $:obinson et al '(*3+. In this review the buyer also

rates its satisfaction with the product and the supplier. /t this point the buying

organization decides whether or not to continue with this specific supplier, or at times

modify the contract. $6otler et al 788>+

The eight phases of the buying process are very much interrelated with one another. They do tend

to follow a logical sequence but in practice two or more phases can take place simultaneously.

This can happen in situations when the buyer and the seller work together. ?or e0ample when

developing a new item, modifying an e0isting item or when new technologies are involved.

?urthermore these phases are not mutually e0clusive this means that something that is normally

being performed in phase four may be performed in phase three depending on the buying

situation. It can be added that it is hard to determine where one phase ends and the ne0t one

starts. $:obinson et al '(*3+

Conclusion:

In the decision-making processes of the buying organizations we could identify eight phases

furthermore the decision-making process was affected by all the influencing factors

$environmental, individual, interpersonal, organizational, financial, and buyer-seller relationship+

and the study also showed that these factors also affected each other.


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'. Aann, A., '((), @ight steps to build a business-to-business relationship, &ournal of

'usiness ( )ndustrial *ar+eting , Bol. ', p.

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Assignment 4 Cb